The best way to enhance your "asking" position is to do your homework.

 

Before approaching a lender, get a copy of your credit report and make sure it is accurate. If there is anything amiss - correct it with the reporting agency. If there are blemishes - prepare explanations. Prepare a written business plan with credible financial and market data. If you are already established in business, be prepared to provide two to three years of financial statements and tax documents. Understand that if you have a poor credit record or cannot demonstrate a personal investment and/or the ability to repay a loan, you will not be considered a good risk. Instead of applying for a loan now, you should work at maintaining good credit (timely, consistent, payment of debt) for two years and then apply.

 

There are many types of loans your banker can discuss with you. One of the main types for small businesses is a SBA loan. The Small Business Administration does not make direct loans to businesses. To get an "SBA loan" a business owner must first contact a commercial loan officer of a bank. Even the programs for women, veterans, and the handicapped require that the business owner start with a bank.

 

The bank evaluates the needs of the business, determines whether the potential borrower is eligible for a loan, helps the borrower fill out application forms, and determines which of the many loan programs is most appropriate for the situation. If the loan needs a guarantee in order to be more attractive to the lender, the package is forwarded to the SBA.

 

The role of the SBA is limited to guaranteeing some portion of the loan that the bank makes to the borrower. This guarantee lowers the risk to the bank of making a loan, but not the amount of the loan. Many banks in the District of Columbia are SBA-approved lenders. However, some are more active in making small business loans than others. Start with your own bank to see if they make small business loans. Your NJ SBDC business consultant can identify for you which banks are SBA-approved lenders.

 

Also see Can My Business Plan Get Me A Loan?

 

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